For decades organisations have been trying to reduce cost and work more efficiently by optimising business processes and investing in technology. But our study shows that much more value can be created if organisations invest in developing their people.
As productivity lags and the global economy crawls, the pressure intensifies for CEOs to improve their organisations’ performance and to capture elusive growth to generate shareholder value. For many companies, the primary focus to achieve this uplift in performance has been on optimising business operations and reducing cost. Technology has become a core focus of the collective vision for high-performance organisations, particularly in automating processes traditionally undertaken by humans, or in augmenting human tasks to create efficiencies. But many argue that operational efficiencies have gone as far as they could, that there is very little left to automate and future gains from efficiency will drive job losses and spending cuts will be mediocre at best.
Our study into the Future of Work shows that technology alone cannot deliver the performance gains CEOs need to create value in the future and, gradually, organisations are starting to realise that optimising their talent is equally important.
But our study also highlights that there is a worrying lack of confidence in leaders’ own ability to improve human performance. In the survey we conducted with 800 business leaders, 62% said they don’t believe they can materially influence their people’s performance. Korn Ferry, through research and long practice, has shown that workforce performance can be boosted, by giving people the tools, conditions and structure they need to do great work.
Optimising human capital, however, is a complex undertaking. There are many elements that come into play:
Ageing population: Baby boomers are retiring. As they retire, they take with them key organisational knowledge and experience.
Skills shortage: Skills needed by the industry and skills available not always match. At present for instance, millennials graduating with STEM degrees are not meeting industry demands.
Diversity: Myriad studies show that diversity contributes to greater innovation and employee engagement but many sectors face challenges in attracting women and minorities.
Multigenerational workforce and globalisation: These are increasing the need for talent to be able to lead diverse teams and have cultural dexterity to thrive in new environments.
Workers are changing: Many are opting to work as independent contractors rather than as full-time employees. And when choosing an organisation, whether on a fulltime or contingent basis, more workers are looking at organisational purpose, culture and quality of life in determining where and for whom they want to work. Salary and benefits, whilst still vital in attracting people, is not as important as it once was in recruits’ decision making.
Compensation pressures: There is an Increased desire for equity stake among senior execs and high potentials and differentiating performance pay within a limited salary budget has been a challenge for many organisations.
Organisations that react appropriately and swiftly and adjust their people strategy to these conditions can release discretionary energy that generates significant value. This can ensure that people remain top-line value multipliers, not bottom-line expenses.
Next week in the fourth seminar of the series The Future of Work is Human, I will be talking with my colleague Stephen Choo about how to create the right environment and culture to optimise your organisation’s talent. Register today.